Investors and traders usually have very different approaches to choosing stocks and other investments assets.


Characteristics of a Healthy Portfolio

It’s important to understand what a comprehensive and healthy portfolio is before choosing the right platform to build and monitor. The definition and characteristics vary from investor to investor, but there are three that everyone should know about.

In Sync with Your Investment Goals:

 A good portfolio is in sync with your investment goals. Many investors have an “asset-first” approach to investment in which they try to buy the most profitable asset at any given time, which is apt if the investment goal is to grow your capital as much as possible in as little a time as possible. But the goals are usually more complex. You may want a certain portion of your portfolio in income-producing assets (like dividend payers) and only a small fraction in hedging assets (like precious metals).

It Reflects Your Risk-Tolerance:

 A healthy portfolio reflects your risk tolerance and changes alongside it. When you are young and have more time to make and correct your investment mistakes, you may chase volatile and risky (but highly profitable) assets like cryptos. When you near retirement, your portfolio might focus more on capital preservation than appreciation, reflecting a relatively low-risk tolerance.

Is Adequately Diversified:

A portfolio can easily be over or under-diversified. You may dilute your return potential by dispersing your capital into too many different investment assets. Or you might push through the limits of a healthy risk profile by diverting the bulk of your investment capital to one industry or a specific asset type. The balance should be the goal here.

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